Moody's downgrades Nissan's credit rating, citing weak sales in U.S.

Nissan - hit by former Chairman Carlos Ghosn's arrest last year and troubles at its North American business - reported a 45% plunge in annual operating profit in the year ending March, and forecast a 28% drop in profit this fiscal year.REUTERS | May 24, 2019, 20:33 IST

France's Renault SA is the top shareholder in Nissan. TOKYO: Moody's cut its rating on Nissan Motor Co by one notch on Friday, citing weak sales in the United States and casting a shadow on the Japanese automaker's move to improve its business following a decline in its annual profit.

Nissan - hit by former Chairman Carlos Ghosn's arrest last year and troubles at its North American business - reported a 45% plunge in annual operating profit in the year ending March, and forecast a 28% drop in profit this fiscal year.

Moody's cut its rating of Nissan's credit to "A3" from "A2", adding that the outlook was negative.

"The downgrade reflects the continuing slide in Nissan's profitability, driven by weak sales in the U.S., its largest market," Moody's Vice President Motoki Yanase said in a statement.

While Nissan's new strategy focuses on margin over unit sales growth and refreshing old models to improve its brand value, the ratings agency expects the overhaul will take "several years".

"The negative outlook on Nissan reflects execution risk as Nissan implements its business strategies globally, reforms its corporate governance and stabilises its alliance with Renault," it said.

In fact, segment leaders like Maruti Suzuki, Tata Motors and Hero MotoCorp have reported de-growth of 34.3 per cent, 45 per cent and 20 per cent, respectively giving a clear indication of a prolonged slowdown in the sector.